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Bed Bath & Beyond Inc BBBY

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Morningstar’s Analysis

Valuation
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1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

Stable Sales and Profits Set to Prevail at Bed Bath & Beyond, but Competition Curbs Our Optimism

Jaime M. Katz, CFA Senior Equity Analyst

Analyst Note

| Jaime M. Katz, CFA |

We don’t plan to materially alter our $22 fair value estimate for no-moat Bed Bath & Beyond after incorporating fourth-quarter results. As such, we view the shares as modestly overvalued, even though they tumbled after the print. Net sales of $2.6 billion were in line with our forecast, and EPS of $0.40 came in roughly $0.10 ahead of our expectations, as selling, general, and administrative costs leveraged about 100 basis points better than our outlook, to 29%. Total comparable sales rose 4% in the period, ahead of our 1% projection, with the e-commerce channel rising 86% while store channel comps fell 20%. While significant digital progress was made over the year, driving e-commerce channel sales to 40% of the total (for the quarter and full year), we view this upswing as a catch-up to peers operating in the category rather than providing Bed Bath with a competitive edge from its higher digital exposure.

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Company Profile

Business Description

Bed Bath & Beyond Inc is a home furnishings retailer, operating around 1,020 stores in all 50 states, Puerto Rico, Canada, and Mexico. Stores carry an assortment of branded bed and bath accessories, kitchen textiles, and cooking supplies. In addition to 834 Bed Bath & Beyond stores, the company operates 132 Buy Buy Baby stores and 54 Harmon Face Values stores (health/beauty care). It recently divested online retailer Personalizationmall.com, the One Kings Lane business and Christmas Tree Shops and That (gifts/housewares), Linen Holdings, and Cost Plus World Market.

Contact
650 Liberty Avenue
Union, NJ, 07083
T +1 908 688-0888
Sector Consumer Cyclical
Industry Specialty Retail
Most Recent Earnings Feb 28, 2021
Fiscal Year End Feb 27, 2022
Stock Type Distressed
Employees 37,600

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